For many years the trend in commercial real estate has been towards commoditization. Properties were priced efficiently; capital was plentiful and return expectations were predictable. As an advisor in that sort of environment, the challenge was typically finding ways to come ahead in bidding wars. Now, pricing is chaotic, capital remains plentiful but much of it is sitting on the sidelines and return expectations are not in line with available investments. Newmontis has found a successful strategy for overcoming this and finding opportunities: work much harder.
"This summer and fall, our investment sales division had interested buy-side clients, but marketed properties were priced as if interest rates were still under 3.0%, nothing made sense” said Trevor Nelson, President of Newmontis Real Estate Investments.
To fix this, Newmontis has gone back to the more energy-intensive deal-sourcing strategies of the past – calling owners directly, getting on the phones with lenders to find potentially troubled properties and reaching out to developers that they expected would have construction loans coming due soon. “It’s time consuming, but it works, we have more properties in our pipeline right now, almost $500 million, than we did at any point in the past two years,” said Trevor Nelson. “And on our development side, we have 200 units under construction in Austin and another 2,000 in the entitlement or acquisition process, and most of those sites were found off-market. We’ve been sending handwritten letters to landowners asking if we could buy their farms, or parking lots or whatever, and you get a surprisingly positive response rate to a well written letter – much better than email.”
While larger firms like CBRE or Marcus and Millichap may have swings in personnel based on macroeconomics, boutique firms can attract and retain higher quality talent during periods of economic uncertainty. Newmontis, which compensates all its employees with salaries and bonuses like an investment-bank model, rather than being strictly commission based, has added acquisition personnel during this time. Their collaborative deal team works together on all projects – both as developers and investment sales advisors – eliminating any inhouse competition.
“This is an exciting time where the creative and sophisticated professionals will stand out” said Javorn Farrell, Vice-President at Newmontis. The team at Newmontis has closed well over a hundred 1031 exchanges, a complicated tax-deferral process for real estate owners, and they continue to see that sector of the market grow. “When the market is just going up, it’s less severe if you’re working with a mediocre broker, but in confusing times like this, partnering with the best team is critical to success” added Mr. Farrell.
Newmontis is a boutique commercial real estate investment and development firm. To learn more about Newmontis, visit www.Newmontis.com.
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Company Name: Newmontis Real Estate Investments
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Website: https://www.newmontis.com/
